<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549
                                   FORM 10-Q


(Mark one)

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934.

For the quarterly period ended March 31, 2001 or

[_]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the transition period from ______________________ to ______________________

Commission File Number:  1-9641
                         ------

                             IDENTIX INCORPORATED
                             --------------------
            (Exact name of registrant as specified in its charter)


           Delaware                                      94-2842496
-------------------------------               ---------------------------------
(State or other jurisdiction of               (IRS Employer Identification No.)
incorporation of organization)

100 Cooper Court, Los Gatos, California                     95032
----------------------------------------                  ----------
(Address of principal executive offices)                  (Zip Code)

                                (408) 335-1400
                                --------------
             (Registrant's telephone number, including area code)

             510 N. Pastoria Avenue, Sunnyvale, California, 94085
                               (Former address)


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days.  YES   X    NO
                                              -----     -----

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

                       34,121,837 shares of Common Stock
                             as of April 30, 2001
<PAGE>

                             IDENTIX INCORPORATED

                                     INDEX


PART I       FINANCIAL INFORMATION

     Item 1  Unaudited Financial Statements

             Consolidated Balance Sheets -
             March 31, 2001 and June 30, 2000............................     3

             Consolidated Statements of Operations -
             Three and nine months ended March 31, 2001 and 2000.........     4

             Consolidated Statements of Cash Flows -
             Nine months ended March 31, 2001 and 2000...................     5

             Notes to Consolidated Financial Statements..................     6

     Item 2  Management's Discussion and Analysis of Financial
             Condition and Results of Operations.........................    10

     Item 3  Quantitative and Qualitative Disclosures
             about Market Risk...........................................    20

PART II      OTHER INFORMATION

     Item 1  Legal Proceedings...........................................    20

     Item 2  Changes in Securities.......................................    20

     Item 6  Exhibits....................................................    21

     Signature...........................................................    21

                                       2
<PAGE>

                             IDENTIX INCORPORATED
                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                           March 31,           June 30,
                                                                                         --------------------------------
                                                                                             2001                2000
                                                                                         ------------        ------------
<S>                                                                                      <C>                 <C>
                                                     ASSETS
Current assets:
   Cash and cash equivalents.......................................................      $  9,848,000        $ 15,620,000
   Restricted cash.................................................................         2,159,000                 -
   Accounts receivable, less allowance for doubtful accounts of
     $1,490,000 and $1,066,000.....................................................        25,556,000          28,352,000
   Inventories.....................................................................         4,670,000           5,180,000
   Prepaid expenses and other assets...............................................         2,931,000           1,188,000
                                                                                         ------------        ------------
       Total current assets........................................................        45,164,000          50,340,000
Property and equipment, net........................................................         3,445,000           2,632,000
Intangibles and other assets.......................................................        28,353,000          30,546,000
                                                                                         ------------        ------------
               Total assets........................................................      $ 76,962,000        $ 83,518,000
                                                                                         ============        ============
                                    LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED
                                          STOCK AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable................................................................      $ 10,986,000        $  8,570,000
   Notes payable...................................................................               -               430,000
   Accrued compensation............................................................         2,472,000           2,894,000
   Other accrued liabilities.......................................................         1,857,000           1,700,000
   Deferred revenue................................................................         3,346,000           2,561,000
                                                                                         ------------        ------------
       Total current liabilities...................................................        18,661,000          16,155,000
                                                                                         ------------        ------------
Other liabilities..................................................................            56,000              90,000
                                                                                         ------------        ------------
       Total liabilities...........................................................        18,717,000          16,245,000
Redeemable convertible preferred stock, $0.01 par value; 2,000,000 shares
   authorized; 234,558 and no shares issued and outstanding........................         3,702,000                 -
                                                                                         ------------        ------------
Shareholders' equity:
   Common stock, $0.01 par value; 100,000,000 and 50,000,000 shares
     authorized; 34,075,210 and 33,026,964 shares issued and outstanding...........           341,000             330,000
   Additional paid-in capital......................................................       128,869,000         123,365,000
   Accumulated deficit.............................................................       (74,486,000)        (56,241,000)
   Accumulated other comprehensive loss............................................          (181,000)           (181,000)
                                                                                         ------------        ------------
       Total shareholders' equity..................................................        54,543,000          67,273,000
                                                                                         ------------        ------------
               Total liabilities, redeemable convertible preferred stock and
                 shareholders' equity..............................................      $ 76,962,000        $ 83,518,000
                                                                                         ============        ============
</TABLE>

             The accompanying notes are an integral part of these
                      consolidated financial statements.

                                       3
<PAGE>

                             IDENTIX INCORPORATED
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                   Three months ended                   Nine months ended
                                                                        March 31,                           March 31,
                                                              ----------------------------        ------------------------------
                                                                  2001             2000               2001              2000
                                                              -----------      -----------        ------------      ------------
<S>                                                           <C>              <C>                <C>               <C>
Revenues:
   Product revenues .............................             $ 7,874,000      $ 7,569,000        $ 25,489,000      $ 22,066,000
   Services revenues ............................              12,111,000       10,011,000          37,089,000        30,507,000
                                                              -----------      -----------        ------------      ------------
       Total revenues ...........................              19,985,000       17,580,000          62,578,000        52,573,000
                                                              -----------      -----------        ------------      ------------
Cost and expenses:
   Cost of product revenues .....................               5,437,000        4,655,000          15,726,000        13,281,000
   Cost of services revenues ....................              10,344,000        8,983,000          32,077,000        26,717,000
   Research, development and engineering ........               2,758,000        2,249,000           7,309,000         6,213,000
   Marketing and selling  .......................               4,291,000        2,647,000          11,764,000         7,801,000
   General and administrative ...................               3,949,000        2,363,000          10,199,000         6,745,000
   Amortization of acquired intangible assets ...                 832,000          825,000           2,497,000         2,573,000
   Write-off of intangibles and other assets.....               1,172,000              -             1,172,000           154,000
   Preferred stock and warrant expense ..........                     -                -             1,259,000               -
                                                              -----------      -----------        ------------      ------------
       Total costs and expenses .................              28,783,000       21,722,000          82,003,000        63,484,000
                                                              -----------      -----------        ------------      ------------
Loss from operations ............................              (8,798,000)      (4,142,000)        (19,425,000)      (10,911,000)
Interest and other income (expense), net ........                 315,000           88,000           1,158,000           460,000
Interest expense ................................                 (21,000)         (31,000)            (85,000)         (108,000)
                                                              -----------      -----------        ------------      ------------
Loss before taxes and equity interest in
   joint venture ................................              (8,504,000)      (4,085,000)        (18,352,000)      (10,559,000)
Provision for income taxes ......................                 (27,000)             -               (83,000)              -
                                                              -----------      -----------        ------------      ------------
Loss before equity interest in joint venture ....              (8,531,000)      (4,085,000)        (18,435,000)      (10,559,000)
Equity interest in joint venture ................                  51,000          (36,000)            187,000           (91,000)
                                                              -----------      -----------        ------------      ------------
Net loss  .......................................             $(8,480,000)     $(4,121,000)       $(18,248,000)     $(10,650,000)
                                                              ===========      ===========        ============      ============
Net loss per share:
   Basic and diluted ............................             $     (0.25)     $     (0.13)       $      (0.54)     $      (0.34)
                                                              ===========      ===========        ============      ============
Weighted average common shares used in basic
   and diluted net loss per share computation ...              33,954,000       31,398,000          33,530,000        30,977,000
</TABLE>

             The accompanying notes are an integral part of these
                      consolidated financial statements.

                                       4
<PAGE>


                             IDENTIX INCORPORATED
                     CONSOLIDATED STATEMENTS OF CASHFLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                                                                    Nine months ended
                                                                                                        March 31,
                                                                                           ---------------------------------
                                                                                                 2001              2000
                                                                                           --------------     --------------
<S>                                                                                        <C>                <C>
Cash flows from operating activities:
   Net loss .....................................................                           $(18,248,000)     $(10,650,000)
   Adjustments to reconcile net loss to net cash
     used for operating activities:
       Depreciation .............................................                              1,333,000         1,178,000
       Gain on disposal of property and equipment ...............                                  7,000               -
       Amortization of intangible assets ........................                              2,815,000         3,083,000
       Amortization of deferred revenue .........................                             (5,329,000)       (3,518,000)
       Interest in joint venture ................................                               (187,000)           91,000
       Inventory reserves .......................................                                839,000           665,000
       Write-off of intangible assets ...........................                                971,000           154,000
       Allowance for doubtful accounts ..........................                                935,000           281,000
       Preferred stock and warrant expense ......................                              1,259,000               -
   Changes in assets and liabilities
       Restricted cash ..........................................                             (2,159,000)              -
       Accounts receivable ......................................                              1,861,000          (982,000)
       Inventories ..............................................                               (329,000)         (987,000)
       Prepaid expenses and other assets ........................                             (1,743,000)         (417,000)
       Accounts payable .........................................                              2,419,000        (2,043,000)
       Accrued compensation .....................................                               (422,000)          515,000
       Other accrued liabilities ................................                                310,000           (70,000)
       Deferred revenue .........................................                              6,114,000         4,506,000
                                                                                           --------------     --------------
   Net cash used for operating activities .......................                             (9,554,000)       (8,194,000)
                                                                                           --------------     --------------
Cash flows from investing activities:
   Capital expenditures .........................................                             (2,153,000)       (1,829,000)
   Additions and deletions to intangibles and other assets ......                             (1,593,000)         (230,000)
                                                                                           --------------     --------------
   Net cash used for investing activities .......................                             (3,746,000)       (2,059,000)
                                                                                           --------------     --------------
Cash flows from financing activities:
   Borrowings under bank lines of credit ........................                              4,914,000         1,849,000
   Payments under bank lines of credit ..........................                             (5,344,000)       (5,190,000)
   Principal payments on short-term note ........................                                    -            (200,000)
   Proceeds from sales of common and preferred stock ...........                               7,958,000        18,508,000
                                                                                           --------------     --------------
   Net cash provided by financing activities ....................                              7,528,000        14,967,000
                                                                                           --------------     --------------
Net increase (decrease) in cash and cash equivalents ............                             (5,772,000)        4,714,000
Cash and cash equivalents at period beginning ...................                             15,620,000         3,013,000
                                                                                           --------------     --------------
Cash and cash equivalents at period end .........................                           $  9,848,000      $  7,727,000
                                                                                           ==============     ==============
Supplemental disclosures of cash flow information:
   Cash paid during the period for interest .....................                           $     85,000      $    108,000

</TABLE>
                The accompanying notes are an integral part of
                   these consolidated financial statements.

                                       5
<PAGE>

                             IDENTIX INCORPORATED
                       NINE MONTHS ENDED MARCH 31, 2001
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


1.   Basis of Presentation

     These accompanying consolidated financial statements and related notes are
     unaudited. However, in the opinion of management, all adjustments
     (consisting only of normal recurring adjustments), which are necessary for
     a fair presentation of the financial position and results of operations for
     the interim periods presented, have been included. These consolidated
     financial statements should be read in conjunction with the audited
     consolidated financial statements and notes thereto for the fiscal year
     ended June 30, 2000 included in the Company's Form 10-K. The results of
     operations for the nine months ended March 31, 2001 are not necessarily
     indicative of results to be expected for the entire fiscal year, which ends
     on June 30, 2001.

     Certain prior year's amounts have been reclassified to conform to the
     current years' presentation.

2.   Inventories

     Inventories are stated at the lower of standard cost (which approximates
     actual cost determined on a first-in, first-out method) or market and
     consisted of the following (unaudited):

<TABLE>
<CAPTION>
                                                                                     March 31,            June 30,
                                                                                  ---------------------------------
                                                                                       2001                 2000
                                                                                  ------------         ------------
<S>                                                                               <C>                  <C>
     Purchased parts and materials ...........................                    $  1,995,000         $  2,141,000
     Work-in-process .........................................                       1,403,000              860,000
     Finished goods, including spares ........................                       1,272,000            2,179,000
                                                                                  ------------         ------------
                                                                                  $  4,670,000         $  5,180,000
                                                                                  ============         ============
</TABLE>

     The Company provides for obsolete, slow moving or excess inventories in
     the period when obsolescence or inventory in excess of expected demand is
     first identified. During the three months ended March 31, 2001, the
     Company provided for $758,000 for obsolete and excess inventory primarily
     related to the introduction and end of life of certain Imaging products.
     This amount includes a charge of $675,000 as discussed in Note 5. During
     the nine months ended March 31, 2001, the Company physically disposed of
     $330,000 of inventory, which had been provided for at June 30, 2000. In
     addition, the Company sold $428,000 of inventory that had been fully
     provided for at June 30, 2000.

3.   Sale of Series A Redeemable Convertible Preferred Stock and Warrant

     In July 2000, the Company entered into a Securities Purchase Agreement with
     Motorola, Inc. ("Motorola"), whereby the Company sold 234,558 shares of
     Series A Redeemable Convertible Preferred Stock (the "Series A Preferred
     Stock") at $15.99 per share, resulting in cash proceeds to the Company of
     $3,702,000, net of issuance costs. In accordance with the Securities
     Purchase Agreement, the price per share was determined using the average
     closing price of the Company's common stock during the ten trading days
     immediately prior to the sale. The sale of the Series A Preferred Stock was
     exempt from registration under applicable securities laws, however,
     Motorola has demand registration rights, which were effective beginning on
     January 7, 2001.

     The Series A Preferred Stock is convertible into shares of the Company's
     common stock on a one-to-one basis, subject to adjustment for anti-
     dilution. The Series A Preferred Stock is redeemable upon a change in
     control or sale of all or substantially all of the assets of the Company at
     a redemption price equal to all accrued or declared but unpaid dividends of
     the Series A Preferred Stock, plus the greater (as adjusted for any stock
     dividends, combinations, or splits with respect to such shares) of (x) the
     then current market price of each such share (i.e. the average closing
     price of the common stock during the ten trading days immediately prior to
     the change of control) or (y) $15.99 per share.

     In connection with the issuance of the Series A Preferred Stock, the
     Company also issued Motorola a warrant to purchase 187,647 shares of the
     Company's common stock at $17.11 per share. The Warrant is immediately
     exercisable and expires

                                       6
<PAGE>

     on July 7, 2005. The Company determined the fair value of the Warrant to be
     $1,908,370 using the Black-Scholes option pricing model and the following
     assumptions: fair value of common stock of $15.99 per share, a contractual
     life of five years, an annual risk free interest rate of 6%, volatility of
     73.9%, and no future dividends.

     Based on the net cash proceeds received from the sale of Series A Preferred
     Stock of $3,702,000, the relative fair values of the Series A Preferred
     Stock and the Warrant totaled $2,443,000 and $1,259,000, respectively. The
     net cash proceeds allocated to the warrant of $1,259,000 were credited to
     additional paid-in capital within shareholders' equity. The issuance of the
     Series A Preferred Stock and Warrant also resulted in a beneficial
     conversion feature which was recorded in the consolidated statement of
     operations. Such amount was included in operating costs and expenses in
     light of the relationship with Motorola contemplated in the Master OEM
     Agreement and certain other agreements.

     The proceeds from the sale of the Series A Preferred Stock will be used
     solely for the research, design, development, marketing and manufacturing
     of product and service solutions related to the Company's itrust division.
     At March 31, 2001, the remaining proceeds from this sale are presented
     within restricted cash on the accompanying balance sheets.

4.   Sale of Common Stock

     On December 22, 2000, the Company entered into a Common Stock Purchase
     Agreement with VeriSign Capital Management, Inc. pursuant to which, the
     Company sold, on January 2, 2001, 264,901 shares of its common stock at
     $7.55 per share. The sale resulted in net cash proceeds to the Company of
     $2,000,000. In accordance with the Common Stock Purchase Agreement, the
     price per share was determined using the average closing price of the
     Company's common stock during the ten trading days immediately prior to the
     sale. The proceeds from the sale of the common stock will be used solely
     for the research, design, development, marketing and manufacturing of
     product and service solutions related to the Company's itrust division. At
     March 31, 2001, proceeds from this sale are presented within restricted
     cash on the accompanying balance sheets.

5.   Significant Charges

     During the three months ended March 31, 2001, the Company took charges
     totaling $2,356,000 consisting of (i) $971,000 for the write-off of certain
     ANADAC intangible assets related to products that the Company no longer
     plans to market; recorded within write-off of intangible and other assets
     (ii) $876,000 for the write-down of inventory and demonstration equipment
     related primarily to the introduction and end-of-life of certain Imaging
     products; $675,000 is recorded within cost of product revenues and $201,000
     is recorded within write-off of intangible and other assets, and (iii)
     $509,000 to establish an allowance for doubtful accounts primarily related
     to specific ANADAC and Imaging accounts receivable; recorded within general
     and administrative expenses.

6.   Earnings Per Share

     Basic earnings per share are computed by dividing net income (loss)
     available to common shareholders by the weighted average number of common
     shares outstanding during the period. Diluted earnings per share gives
     effect to all dilutive potential common shares outstanding during the
     period, including redeemable convertible preferred stock as well as stock
     options and warrants, using the treasury stock method.

     Following is the calculation of basic and diluted net loss per share for
     the periods presented (unaudited):

<TABLE>
<CAPTION>
                                                  Three months ended                       Nine months ended
                                                       March 31,                                March 31,
                                            -------------------------------         ----------------------------------
                                                2001               2000                 2001                  2000
                                            -----------         -----------         ------------          ------------
<S>                                         <C>                 <C>                 <C>                   <C>
Net loss ...............................    $(8,480,000)        $(4,121,000)        $(18,248,000)         $(10,650,000)
                                            -----------         -----------         ------------          ------------
Shares used in computing net loss
per share:
   Basic and Diluted ...................     33,954,000          31,398,000           33,530,000            30,977,000
                                            -----------         -----------         ------------          ------------
Net loss per share:
   Basic and Diluted ...................    $     (0.25)        $     (0.13)        $      (0.54)         $      (0.34)
                                            ===========         ===========         ============          ============
</TABLE>

     At March 31, 2001, there were redeemable convertible preferred stock,
     options and warrants to purchase 6,866,000 common stock. Options and
     warrants outstanding during the three and nine months ended March 31, 2001
     and 2000, were not included in

                                       7
<PAGE>

     the computation of diluted net loss per share as their effect was anti-
     dilutive.

7.   Comprehensive Loss

     Other comprehensive loss includes charges or credits to equity that are not
     the result of transactions with owners. Accumulated other comprehensive
     loss consists of foreign currency translation adjustments. As the Company
     substantially liquidated its foreign operation in February 1998, there has
     been no other comprehensive income (loss) from that date.

8.   Reportable Segments Data

     The Company has determined its reportable segments based on its method of
     internal reporting. The Company's reportable segments are Imaging,
     Security, Government Services and Fingerprinting Services. Management has
     organized the Company on product lines. The Company's reportable segments
     are strategic business units that offer different products and services and
     include inter-segment revenues, corporate allocations and administrative
     expenses. Revenues are attributed to the reportable segment of the sales or
     service organizations, and costs directly and indirectly incurred in
     generating revenues are similarly assigned. Segment information is as
     follows (unaudited):

<TABLE>
<CAPTION>
                                                              Three months ended                        Nine months ended
                                                                   March 31,                                 March 31,
                                                      ---------------------------------          ---------------------------------
                                                           2001                 2000                 2001                 2000
                                                      ------------         ------------          ------------         ------------
<S>                                                   <C>                  <C>                    <C>                 <C>
Total revenues:
   Imaging .............................               $ 5,595,000         $  4,802,000          $ 19,588,000         $ 15,377,000
   Security ............................                 2,279,000            2,767,000             5,901,000            6,689,000
   Government Services .................                13,298,000           10,781,000            40,387,000           33,120,000
   Elimination of inter-segment revenues                (1,187,000)            (770,000)           (3,298,000)          (2,613,000)
                                                      ------------         ------------          ------------         ------------
                                                       $19,985,000         $ 17,580,000          $ 62,578,000         $ 52,573,000
                                                      ============         ============          ============         ============
Depreciation and amortization:
   Imaging .............................               $   258,000         $    221,000          $    778,000         $    863,000
   Security ............................                   936,000              951,000             2,793,000            2,804,000
   Government Services .................                   174,000              204,000               577,000              594,000
                                                      ------------         ------------          ------------         ------------
                                                       $ 1,368,000         $  1,376,000          $  4,148,000         $  4,261,000
                                                      ============         ============          ============         ============
Interest and other income, net:
   Imaging .............................               $    51,000         $      2,000          $    216,000         $    168,000
   Security ............................                    92,000                4,000               384,000               46,000
   Government Services .................                    96,000               30,000               345,000               82,000
   Fingerprinting Services .............                    76,000               52,000               213,000              164,000
                                                      ------------         ------------          ------------         ------------
                                                       $   315,000         $     88,000          $  1,158,000         $    460,000
                                                      ============         ============          ============         ============
Interest expense:
   Imaging .............................               $       -           $      4,000          $        -           $     20,000
   Security ............................                       -                    -                     -                 14,000
   Government Services .................                    21,000               27,000                85,000               74,000
                                                      ------------         ------------          ------------         ------------
                                                       $    21,000         $     31,000          $     85,000         $    108,000
                                                      ============         ============          ============         ============
Net income (loss):
   Imaging .............................               $(1,656,000)        $ (1,055,000)         $ (1,047,000)        $ (2,038,000)
   Security ............................                (5,816,000)          (3,108,000)          (17,143,000)          (9,353,000)
   Government Services .................                (1,135,000)              26,000              (457,000)             668,000
   Fingerprinting Services .............                   127,000               16,000               399,000               73,000
</TABLE>


                                       8
<PAGE>
<TABLE>
<S>                                                                 <C>             <C>              <C>              <C>
                                                                  --------------     -------------   -------------    ------------
                                                                    $(8,480,000)     $(4,121,000)    $(18,248,000)    $(10,650,000)
                                                                  ==============     =============   =============    ============
Capital expenditures:
   Imaging........................................................  $   471,000      $   637,000     $  1,038,000     $  1,485,000
   Security.......................................................      388,000           57,000          703,000          198,000
   Government Services............................................      105,000           81,000          412,000          146,000
                                                                  --------------     -------------   -------------    ------------
                                                                    $   964,000      $   775,000     $  2,153,000     $  1,829,000
                                                                  ==============     =============   =============    ============
</TABLE>
<TABLE>
<CAPTION>
                                                                          March 31,                     June 30,
                                                                  ------------------------    --------------------------
<S>                                                                 <C>                         <C>
                                                                           2001                          2000
                                                                  ------------------------    --------------------------
Identifiable assets:
   Imaging........................................................             $22,815,000                   $31,042,000
   Security.......................................................              33,669,000                    32,987,000
   Government Services............................................              20,478,000                    19,489,000
                                                                  ------------------------    --------------------------
                                                                               $76,962,000                   $83,518,000
                                                                  ========================    ==========================
</TABLE>

9.  Foreign Operations Data

    In geographical reporting, revenues and identifiable assets are attributed
    to the geographical location of the sales and service organizations as
    follows (unaudited):

<TABLE>
<CAPTION>
                                                                     Three months ended             Nine months ended
                                                                         March 31,                      March 31,
                                                              ------------------------------    --------------------------
<S>                                                             <C>             <C>             <C>            <C>
                                                                    2001            2000           2001           2000
                                                              --------------    ------------    -----------    -----------
Total revenues:
   North America..............................................   $19,023,000     $16,811,000    $59,757,000    $50,031,000
   International..............................................       962,000         769,000      2,821,000      2,542,000
                                                              --------------    ------------    -----------    -----------
                                                                 $19,985,000     $17,580,000    $62,578,000    $52,573,000
                                                              ==============     ===========    ===========    ===========
                                                                 March 31,        June 30,
                                                              --------------     -----------
                                                                    2001            2000
                                                              --------------     -----------
Identifiable assets:
   North America..............................................   $75,624,000     $81,043,000
   International..............................................     1,338,000       2,475,000
                                                              --------------     -----------
                                                                 $76,962,000     $83,518,000
                                                              ==============     ===========

</TABLE>

10.  Recent Accounting Pronouncement

     In December 1999, the Securities and Exchange Commission issued Staff
     Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
     Statements". SAB 101 provides guidance on applying generally accepted
     accounting principles to revenue recognition in financial statements. SAB
     101, as amended, is effective for the Company in the fourth quarter of
     fiscal 2001. The potential impact of implementing SAB 101 on the Company's
     financial position or results of operations is still being assessed by
     management and was unknown at March 31, 2001. However, since the
     implementation of SAB 101 could result in changes to the timing of the
     Company's revenue recognition, its effect could be material and adverse to
     the Company's financial position and results of operations in the period of
     implementation.


11.  Bank Covenant Waiver

                                       9
<PAGE>

At March 31, 2001, the Company was in default of one of its bank line of credit
covenants. The Company has obtained a waiver of default from the bank for the
breach of the covenant. At March 31, 2001, there were no amounts outstanding
under the bank line of credit.


               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


Item 2.

     The statements in this report on Form 10-Q that relate to future plans,
events, or performance are forward-looking statements. Actual results, events
and performance may differ materially due to a variety of factors including the
factors described under "Risk Factors" below. The Company undertakes no
obligation to publicly update these forward-looking statements to reflect events
or circumstances that occur after the date hereof or to reflect the occurrence
of unanticipated events.

OVERVIEW

     Identix Incorporated ("Identix" or the "Company") is a leader in designing,
developing, manufacturing and marketing comprehensive biometric technology based
solutions for security, fraud prevention, law enforcement and other
applications. Identix's products and services are classified into business
segments: (i) biometric security ("Security") solutions that verify the identity
of an individual through the unique physical biological characteristics of a
fingerprint; (ii) biometric imaging ("Imaging") solutions that electronically
capture forensic quality fingerprint images directly from an individual's
fingers for law enforcement and other applications; and (iii) information
technology, engineering and management consulting services primarily to
government agencies ("Government Services"). These solutions employ the
Company's industry leading optical fingerprint capture technologies, its
proprietary algorithms and customizable application software suites. Identix's
technologies and know-how enable it to produce Security and Imaging solutions
for commercial, federal, state and local government customers worldwide. The
Company provides Government Services through ANADAC, Inc. ("ANADAC"), a wholly
owned subsidiary of the Company. The Company provides fingerprinting services
through Sylvan/Identix Fingerprinting Centers, LLC ("SIFC"), a joint venture
with Sylvan Learning Systems, Inc.

     In July 2000, the Company formed itrust, a new division within Identix, in
conjunction with an investment of $3,750,000 by its initial partner, Motorola
Incorporated. The itrust division is to offer security and content management
solutions for the wireless web, internet and intranet markets.

RESULTS OF OPERATIONS

Revenues
--------

     Revenues for the three and nine months ended March 31, 2001 were
$19,985,000 and $62,578,000 compared to $17,580,000 and $52,573,000,
respectively, for the same periods in the prior fiscal year. The increase in
revenues of 14% and 19% for the three and nine months ended, respectively, was
due to increases in both product and services revenues. In the three and nine
months ended March 31, 2001, the Company had one customer, the U.S. Department
of Defense ("DOD"), which accounted for 41% and 45% respectively, of total
revenue.

     Product revenues were $7,874,000 and $25,489,000 for the three and nine
months ended March 31, 2001, compared to $7,569,000 and $22,066,000 for the same
periods in the prior fiscal year. For the three and nine months ended March 31,
2001, the increase in product revenues of 4% and 16%, respectively, was due to
an increase in Imaging revenues, primarily from live-scan system shipments and
customer service programs.

     International sales accounted for $962,000 and $2,821,000 or 12% and 11%,
respectively, of the Company's product revenues for the three and nine months
ended March 31, 2001 compared to $769,000 and $2,542,000 or 10% and 12%
respectively, for the same periods in the prior fiscal year. The increase in
international sales for the three and nine months was primarily due to an
increase in sales of Security products that have traditionally accounted for a
majority of the Company's international revenue. The Company expects
international sales to continue to represent a large portion of product revenues
although the percentage may fluctuate from period to period. Identix's
international sales are predominately denominated in

                                      10
<PAGE>

U.S. dollars, and the Company actively monitors its foreign currency exchange
exposure and, if significant, will take action to reduce foreign exchange risk.
To date, the Company has not entered into any hedging transactions.

     Services revenues were $12,111,000 and $37,089,000 for the three and nine
months ended March 31, 2001 compared to $10,011,000 and $30,507,000 for the same
periods in the prior fiscal year. The increase in services revenues of 21% and
22% for the three and nine months ended March 31, 2001, respectively, was
primarily related to revenues recognized for equipment shipments to the NAVSEA
Chief Information Office and revenue from the U.S. Navy Special Warfare
Contract. The majority of the Company's services revenues are generated directly
from contracts with the U.S. government, principally the DOD. For the three and
nine months ended March 31, 2001, revenues directly from the DOD and from other
U. S. government agencies accounted for 90% of the Company's total services
revenues compared to 85% and 90% respectively, for the same periods in the prior
fiscal year.

     The Company's services business generates a significant amount of its
revenues from time-and-materials ("T&M") contracts and from firm fixed-price
("FFP") contracts. During the three and nine months ended March 31, 2001, the
Company derived 96% and 95% respectively, of its services revenues from FFP and
T&M contracts. FFP contracts provide for a fixed price for stipulated services
or products, regardless of the costs incurred, which may result in losses from
cost overruns. T&M contracts typically provide for payment of negotiated hourly
rates for labor incurred plus reimbursement of other allowable direct and
indirect costs. The Company assumes greater performance risk on T&M and FFP
contracts and the failure to accurately estimate ultimate costs or to control
costs during performance of the work can result in reduced profit margins or
losses. There can be no assurance that the Company's services business will not
incur cost overruns for any FFP and T&M contracts it is awarded. The Company's
services business also generates revenues from cost plus fixed fee ("CPFF")
contracts, which accounted for approximately 4% and 5% respectively, of its
services revenues for the three and nine months ended March 31, 2001. CPFF
contracts provide for the reimbursement of allowable costs, including indirect
costs plus a fee or profit. Revenues generated from contracts with government
agencies are subject to audit and subsequent adjustment by negotiation between
the Company and representatives of such government agencies. ANADAC is currently
being audited by the Defense Contract Audit Agency for the period from July 1,
1997 to June 30, 2000.

     Gross margin on product revenues was 31% and 38% for the three and nine
months ended March 31, 2001, as compared to 39% and 40% respectively, for the
same periods in the prior fiscal year. The decrease in gross margin for the
three months ended March 31, 2001 compared to the prior year period was
primarily due to charges against cost of product revenues of $675,000 for write-
downs in inventory of (i) certain imaging products related primarily to the
introduction of the TouchPrint 2000 and the end of life of the TouchPrint 600
and related products, and (ii) certain security products due to inventory in
excess of expected demand. During the three and nine months ended March 31,
2000, charges were made against cost of product revenues of $85,000 and $524,000
respectively, for write downs in inventory of certain physical access security
products due to market price pressures. The Company expects gross margins to
fluctuate in future periods due to changes in the product mix, the costs of
components and the competition in the industry.

     Gross margin on services revenues was 15% and 14% for the three and nine
months ended March 31, 2001, as compared to 10% and 12% for the same periods in
the prior fiscal year. The increase in gross margin for the three months and
nine months ended March 31, 2001 compared to the prior year periods was
primarily due to lower fixed costs and increases in revenues.

Research, Development and Engineering
-------------------------------------

     Research, development and engineering expenses were $2,758,000 or 35% and
$7,309,000 or 29% of product revenues for the three and nine months ended March
31, 2001, compared to $2,249,000 or 30% and $6,213,000 or 28% of product
revenues for the same periods in the prior fiscal year. The increase in
research, development and engineering expenses for the three and nine months was
primarily due to the addition of engineering staff, consultants and related
expenses to further develop the Company's itrust service solutions, Security
products and Imaging products. Management believes that investment in research
and development is critical to maintaining a strong technological position in
the industry and therefore expects research, development and engineering
expenses to continue to be a substantial expense in future quarters.

Marketing and Selling
---------------------

     Marketing and selling expenses were $4,291,000 or 21% and $11,764,000 or
19% of total revenues for the three and nine months ended March 31, 2001,
compared to $2,647,000 or 15% and $7,801,000 or 15% of total revenues for the
same periods in the prior fiscal year. The increase in marketing and selling
expenses was primarily due to increased staffing and promotional costs for
Security products, Imaging products and itrust services solutions.

                                      11
<PAGE>

General and Administrative
--------------------------

     General and administrative expenses were $3,949,000 or 20% and $10,199,000
or 16% of total revenues for the three and nine months ended March 31, 2001,
compared to $2,363,000 or 13% and $6,745,000 or 13% of total revenues for the
same periods in the prior fiscal year. The increase in general and
administrative expenses for the three and nine months ended March 31, 2001 as
compared to the prior year periods was primarily due to an increase in staffing
and other related administrative expenses to support growth in operations,
primarily in the Security business which includes the itrust division, and the
development of supporting infrastructure. In addition, during the three months
ended March 31, 2001, the Company took a charge of $509,000 to establish an
allowance for doubtful accounts primarily related to specific ANADAC and Imaging
accounts receivable. The Company also took a charge of $971,000 for the write-
off of certain ANADAC intangible assets related to products the Company no
longer plans to market.

Write-off of Intangible and Other Assets
----------------------------------------

     Write-off of intangible and other assets were $1,172,000 for the three
and nine months ended March 31, 2001, which represented 6% and 2% of total
revenue respectively, compared to nil and $154,000 for the same periods in the
prior fiscal year. The write-off of intangible and other assets for the three
and nine months ended March 31, 2001 was due to $971,000 for the write-off of
certain ANADAC intangible assets related to products that the Company no
longer plans to market, and (ii) $201,000 for the write-down of engineering
prototypes and demonstration equipment related to the introduction and end-of-
life of certain Imaging products. For the nine months ended March 31, 2000,
the write-off of intangible and other assets of $154,000 was for certain
physical access Security products that the Company ceased marketing.

Preferred Stock and Warrant Expense
-----------------------------------

     In connection with the private sale of shares of Series A redeemable
convertible Preferred Stock and Warrant in July 2000 to Motorola, Inc., (see
Note 3 of Notes to Consolidated Financial Statements), the Company recognized a
one-time preferred stock and warrant expense of $1,259,000 representing the
relative fair value of the warrant. The value of the warrant was calculated
using the Black-Scholes option-pricing model.

Interest and Other Income (Expense), Net
----------------------------------------

     For the three and nine months ended March 31, 2001, interest and other
income (expense), net was $315,000 and $1,158,000 respectively, compared to
$88,000 and $460,000 for the same periods in the prior fiscal year. The increase
in interest and other income (expense), net was primarily related to an increase
in interest income generated from investing the proceeds from the sales of both
common and preferred stock.

Interest Expense
----------------

     Interest expense was $21,000 and $85,000 for the three and nine months
ended March 31, 2001 compared to $31,000 and $108,000 for the same periods in
the prior fiscal year and was primarily due to borrowings under the ANADAC Line
of Credit. The weighted average interest rate paid on borrowings under the
ANADAC Line of Credit during the three months ended March 31, 2001 was 8.5%.

Income Taxes
------------

     The Company recorded income tax provisions of $27,000 and $83,000 for the
three and nine months ended March 31, 2001, which consisted of certain state
franchise taxes. Income tax provisions for the three and nine months ended March
31, 2000, were immaterial.

Equity Interest in Joint Venture
--------------------------------

     The equity interest in joint venture represents the Company's 50% share of
the results of SIFC. For the three and nine months ended March 31, 2001, the
equity interest in joint venture was income of $51,000 and $187,000
respectively, compared to losses of $36,000 and $91,000 for the same periods in
the prior fiscal year. The increase in the equity interest was due to an
increase in net income of SIFC.

Liquidity and Capital Resources
-------------------------------

     The Company financed its operations during the nine months ended March 31,
2001 primarily from working capital and from the proceeds of the sale of
preferred and common stock. As of March 31, 2001, the Company's principal
sources of liquidity consisted of $26,503,000 of working capital, including
$9,848,000 in cash and cash equivalents, $2,159,000 of restricted cash, and
$11,342,000 available for future borrowings under bank lines of credit. The
restricted cash is to be used solely for the research, design, development,
marketing and manufacturing of product and service solutions related to the
Company's itrust division.

     The Identix Line of Credit is a $7,500,000 bank line of credit
collateralized by the property of Identix. Under the bank line of credit, the
Company may borrow up to 80% of eligible accounts receivable and amounts drawn
bear interest at the bank's prime rate of interest plus one half of one percent
(9% at March 31, 2001). The line of credit expires on June 20, 2001. At March
31, 2001, there was no amount outstanding and $5,908,000 was available under the
Identix Line of Credit. The Identix

                                      12
<PAGE>

Line of Credit agreement contains financial and operating covenants, including
restrictions on the Company's ability to pay dividends on its common stock. At
March 31, 2001, the Company was in default on one of its bank line of credit
covenants. The Company has obtained a waiver of default from the bank for the
breach of the covenant.

     The ANADAC Line of Credit is a $6,000,000 bank line of credit
collateralized by ANADAC's accounts receivable and certain other assets. Under
the ANADAC Line of Credit, ANADAC may borrow against qualified accounts
receivable. Amounts drawn bear interest at the bank's prime rate of interest
(8.5% at March 31, 2001). The line of credit expires on June 30, 2001. At March
31, 2001, no amount was outstanding and $5,434,000 was available under the
ANADAC Line of Credit. The ANADAC Line of Credit agreement contains financial
and operating covenants and the Company was in compliance with all such
covenants at March 31, 2001.

     The Company used cash for operating activities of $9,554,000 during the
nine months ended March 31, 2001 as compared to $8,194,000 for the same period
in the prior fiscal year. The primary use of cash for the nine months ended
March 31, 2001 was due to (i) the net loss of $18,248,000 which includes a one-
time non-cash charge for preferred stock and warrant expense of $1,259,000,
amortization of intangible assets of $2,815,000 and depreciation of $1,333,000,
and (ii) an increase in restricted cash of $2,159,000 and prepaid expenses and
other assets of $1,743,000, partially offset by an increase in accounts payable
of $2,419,000 and a decrease in accounts receivable of $1,861,000. The primary
use of cash during the nine months ended March 31, 2000 was due to (i) the net
loss of $10,650,000 which includes amortization of intangible assets of
$3,083,000, depreciation of $1,178,000 and an increase in the inventory reserve
of $665,000, (ii) a decrease in accounts payable of $2,043,000, (iii) an
increase in inventory of $987,000, which was partially offset by an increase in
deferred revenue of $988,000 and a decrease in accrued compensation of $515,000.

     The Company used cash of $3,746,000 for investing activities during the
nine months ended March 31, 2001 consisting of purchases of property and
equipment of $2,153,000 and additions to intangible assets of $1,593,000. During
the nine months ended March 31, 2000, the Company used cash of $2,059,000 for
investing activities primarily for the purchase of property and equipment of
$1,829,000.

     The Company generated cash of $7,528,000 from financing activities during
the nine months ended March 31, 2001 as compared to $14,967,000 for the same
period in the prior fiscal year. Financing activities for the nine months ended
March 31, 2001, consisted of proceeds from the sale of preferred stock and a
warrant of $3,702,000, net of issuance costs, the sale of common stock of
$4,256,000, partially offset by net repayments of $430,000 against the ANADAC
line of credit. Financing activities during the nine months ended March 31,
2000, consisted of proceeds from the sales of common stock and warrants of
$18,508,000, net of issuance costs, partially offset by net repayments of
$3,341,000 against the Company's lines of credit.

     The Company had capital expenditure commitments of $4,278,000 as of March
31, 2001, primarily for leasehold improvements and furniture in connection with
new offices for Identix and ANADAC. The furniture and other equipment is
expected to be financed under operating leases.

     The Company believes that cash flows from operations, together with
existing working capital and two existing bank lines of credit, will be adequate
to fund the Company's cash requirements through fiscal 2001. In January 2001,
the Company received net cash proceeds of $2,000,000 from the sale of common
stock (see Note 4 of Notes to Consolidated Financial Statements). However, the
Company will need to raise, in the next 12 months, additional equity or debt
financing to meet its working capital or capital equipment needs. Additionally,
each of Identix and ANADAC will need to extend existing lines of credit or
negotiate new lines of credit on or prior to June 20, 2001 and June 30, 2001,
respectively. There can be no assurance that the Company will be able to obtain
such financing, extend existing lines of credit or negotiate new lines of
credit, or that the terms of financing or credit lines will be favorable to the
Company. In addition, the Company may seek to obtain additional equity financing
from possible strategic partners interested in establishing a relationship with
the Company's itrust division.

Recent Accounting Pronouncements
--------------------------------

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements". SAB 101 provides guidance on applying generally accepted accounting
principles to revenue recognition in financial statements. SAB 101 as amended is
effective for the Company in the fourth quarter of fiscal 2001. The potential
impact of implementing SAB 101 on the Company's financial position or results of
operations is still being assessed by management and was unknown at March 31,
2001. However, since the implementation of SAB 101 could result in changes to
the timing of the Company's revenue recognition, its effect could be material
and adverse to the Company's financial position and results of operations in the
period of implementation.

RISK FACTORS

                                      13
<PAGE>

     This report on Form 10-Q contains forward-looking statements that involve
risks and uncertainties. The Company's business, operating results, financial
performance, and share price may be materially adversely affected by a number of
factors, including but not limited to the following risk factors, any one of
which could cause actual results to vary materially from anticipated results or
from those expressed in any forward-looking statements made by the Company in
this report on Form 10-Q or in other reports, press releases or other statements
issued from time to time. Additional factors that may cause such a difference
are set forth in the annual report on Form 10-K.

Our product revenues are derived from the sale of biometric products and
------------------------------------------------------------------------
services and our business will not grow unless the market for biometric
-----------------------------------------------------------------------
solutions expands both domestically and internationally.
--------------------------------------------------------

     Biometric solutions have not gained widespread commercial acceptance. We
cannot accurately predict the future growth rate, if any, or the ultimate size
of the biometric technology market. The expansion of the market for our products
and services depends on a number of factors including:

 .    the cost, performance and reliability of our products and services and the
     products and services of competitors

 .    customers' perception of the perceived benefit of biometric solutions

 .    public perceptions of the intrusiveness of these solutions and the manner
     in which firms are using the fingerprint information collected

 .    public perceptions regarding the confidentiality of private information

 .    customers' satisfaction with our products and services

 .    marketing efforts and publicity regarding these products and services

     Certain groups have publicly objected to the use of biometric products for
some applications on civil liberties grounds and legislation has been proposed
to regulate the use of biometric security products. Even if biometric markets
develop, our products and services may not gain wide market acceptance. Even if
biometric solutions gain wide market acceptance, there can be no assurance that
the Company's products and services will adequately address the market
requirements.

We face intense competition from other biometric solution providers as well as
------------------------------------------------------------------------------
identification and security systems providers.
----------------------------------------------

     A significant number of established and startup companies have developed or
are developing and marketing software and hardware for fingerprint biometric
security applications that currently compete or will compete directly with our
Security products. Some of these companies have developed or are developing and
marketing semiconductor or optically based direct contact fingerprint image
capture devices. Other companies have developed or are developing and marketing
other methods of biometric identification such as retinal blood vessel or iris
pattern, hand geometry, voice and facial structure. If one or more of these
approaches were widely adopted, it would significantly reduce the potential
market for our products. Our Security products also compete with non-biometric
technologies such as certificate authorities, and traditional key, card,
surveillance systems and passwords. The biometric security market is a rapidly
evolving and intensely competitive market and the Company believes that
additional competitors may yet enter the market and become significant long-term
competitors.

     Our Imaging products face intense competition from a number of competitors
who are actively engaged in developing and marketing livescan products,
including Visionics Corporation, Heimann Biometric Systems GmbH and Printrak
International Inc.

     We expect competition to increase and intensify in the near term in both
the Security and Imaging markets. Companies competing with the Company may
introduce products that are competitively priced, that have increased
performance or functionality or that incorporate technological advances not yet
developed or implemented by us. Some present and potential competitors have
financial, marketing, research resources substantially greater than ours. In
order to compete effectively in this environment, we must continually develop
and market new and enhanced products at competitive prices and must have the
resources available to invest in significant research and development
activities. The failure to do so could have a material adverse effect on our
business operations, financial results and stock price.


Future growth depends in part on the success of itrust, a relatively new
------------------------------------------------------------------------
division with no operating history; anticipation of future losses.
------------------------------------------------------------------

     A portion of the Company's future growth will depend on the success of the
Company's itrust division. itrust was formed in July 2000 and has no operating
history. itrust's success will depend on many factors, including, but not
limited to: the ability of the Company to form additional strategic partnerships
that will contribute technical and commercial value to itrust and contribute to
the division's growth; the demand for the Company's Security products and itrust
services; the ability of the

                                      14
<PAGE>

Company to successfully and rapidly manufacture, disseminate and deploy
biometric enabled products and itrust services, and the ability and willingness
of it's collaborative partners such as Motorola, Inc. and VeriSign, Inc. to
successfully and rapidly promote, manufacture, disseminate and deploy biometric
enabled products and itrust services; the levels of competition in the space for
Internet and Wireless Web security services; the perceived need for secure
communications and commerce in such markets; the Company's ability to
successfully introduce new products and services; and the ability of the Company
to expand it's operations and attract integrate, retain and motivate qualified
sales, marketing, and research and development personnel. In addition, the
Company has experienced net losses in each of the past two fiscal years and
itrust is not expected to contribute significant revenues to the Company in the
foreseeable future. At the same time, however, the Company will incur
significant costs in the design, development, manufacture, sale and deployment
of itrust products and services and in the execution of itrust's business plan.
In part because of the significant investment the Company will make in itrust,
the Company expects to incur substantial additional losses in the foreseeable
future.

In our services business, we face substantial competition from professional
---------------------------------------------------------------------------
service providers of all sizes in the government marketplace.
-------------------------------------------------------------

     ANADAC is increasingly being required to bid on firm fixed price and
similar contracts that result in greater performance risk to ANADAC. If ANADAC
is not able to maintain a competitive cost structure, support specialized market
niches, retain highly qualified personnel or align with technology leaders, we
may lose our ability to compete successfully in the services business.

The biometrics industry is characterized by rapid technological change and
--------------------------------------------------------------------------
evolving industry standards, which could render existing products obsolete.
---------------------------------------------------------------------------

     Our future success will depend upon our ability to develop and introduce a
variety of new products and services and enhancements thereto in order to
address the changing, sophisticated needs of the marketplace. Material delays in
introducing new products and services and enhancements thereto or the failure to
offer innovative products and services at competitive prices may cause customers
to forego purchases and of our products and services and purchase those of our
competitors.

Our financial and operating results often vary significantly from quarter to
----------------------------------------------------------------------------
quarter and may be negatively affected by a number of factors.
--------------------------------------------------------------

The following are some other reasons why our financial and operating results may
fluctuate from quarter to quarter:

     .    downturns in the US, North American or international economies

     .    reduced demand for products and services caused by a competitor's
          price reductions, the introduction of new competitors, or the
          introduction of enhanced products or services from new or existing
          competitors

     .    reduced pricing and/or increased spending in response to competition
          or new market opportunities

     .    changes in the mix of products and services we or our distributors
          sell

     .    cancellation, delays or contract amendments by government agency
          customers

     .    the lack of availability of government funds

     .    litigation costs

     .    expenses related to acquisitions

     .    other one-time financial charges

     .    the lack of availability or increase in cost of key components

     .    the inability to successfully manufacture in volume certain of the
          Company's products that may contain complex designs and components.

Additionally, certain of our Imaging products often have a lengthy sales cycle
while the customer evaluates and receives approvals for purchase. If, after
expending significant funds and effort, we fail to receive an order, a negative
impact on our financial results and stock price could result.

     It is difficult to predict accurately the sales cycle of any large order
for any of our products. If we do not ship one or more large orders as forecast
for a fiscal quarter, our total revenues and operating results for that quarter
could be materially and adversely affected.

     Further, the lead-time for ordering parts and materials and building our
Security or Imaging products can be many months. As a result, we must order
parts and materials and build our products based on forecasted demand. If demand
for our products lags significantly behind our forecasts, we may produce more
products than we can sell, which can result in cash flow

                                      15
<PAGE>

problems and write-offs or write-downs of obsolete inventory.

We derive a majority of our services revenue from government contracts, which
-----------------------------------------------------------------------------
are often non-standard, involve competitive bidding and may be subject to
-------------------------------------------------------------------------
cancellation without penalty.
-----------------------------

     Government contracts frequently include provisions that are not standard in
private commercial transactions. For example, government contracts may include
bonding requirements and provisions permitting the purchasing agency to cancel
the contract without penalty in certain circumstances. As public agencies, our
prospective customers are also subject to public agency contract requirements
that vary from jurisdiction to jurisdiction. Some of these requirements may be
onerous or impossible to satisfy.

     In addition, public agency contracts are frequently awarded only after
formal competitive bidding processes, which have been and may continue to be
protracted, and typically impose provisions that permit cancellation in the
event that funds are unavailable to the public agency. There is a risk that we
may not be awarded any of the contracts for which our products are bid or, if
awarded, that substantial delays or cancellations of purchases may follow as a
result of protests initiated by losing bidders. In addition, local government
agency contracts may be contingent upon availability of matching funds from
federal or state entities.

     For the year ended June 30, 2000, we derived approximately 86% of our
services revenue directly from contracts relating to the Department of Defense
and other U.S. Government agencies. The loss of a material government contract
due to budget cuts or otherwise could have a severe negative impact on our
financial results and stock price.

     For the year ended June 30, 2000, we derived approximately 82% of our
services revenue from time and materials contracts and firm-fixed-price
contracts. We assume certain performance risk on these contracts. If we fail to
estimate accurately ultimate costs or to control costs during performance of the
work, our profit margins may be reduced and we may suffer losses. In addition,
revenues generated from government contracts are subject to audit and subsequent
adjustment by negotiation with representatives of the government agencies. The
Defense Contract Audit Agency has not yet audited ANADAC for the period from
July 1, 1997 to June 30, 2000. While the Company believes that the results of
such audit will have no material effect on the Company's profits, there can be
no assurance that no adjustments will be made and that, if made, such
adjustments will not have a material adverse effect on the Company's business,
financial condition and results of operation.


We rely in part upon  OEM  and distribution partners to distribute our products
-------------------------------------------------------------------------------
and may be adversely affected if those parties do not actively promote our
--------------------------------------------------------------------------
products or pursue installations that use our equipment.
--------------------------------------------------------

     A significant portion of our product revenues comes from sales to partners
including OEMs, systems integrators, distributors and resellers. Some of these
relationships are formalized in agreements; however, the agreements are often
terminable with little or no notice and subject to periodic amendment. We cannot
control the amount and timing of resources that our partners devote to
activities on our behalf.

     We intend to continue to seek strategic relationships to distribute,
license and sell certain of our products. We, however, may not be able to
negotiate acceptable relationships in the future and cannot predict whether
current or future relationships will be successful.

We rely heavily on products and services provided by International Technology
-----------------------------------------------------------------------------
Concepts, Inc. ("IT Concepts")
------------------------------

     Both our Imaging and Security Divisions purchase certain complete biometric
security and imaging products, components of products and research, development
and engineering services related to the development of products from IT
Concepts. itrust is also working with IT Concepts for the development of certain
of itrust's solutions. In turn IT Concepts subcontracts portions of its
development work to an affiliate in Russia and imports a portion its engineering
and personnel resources from Russia under applicable immigration laws. In recent
years competition for a limited number of available visas for foreign high-
technology workers and/or consultants has intensified as more U.S. companies
have chosen to look abroad for supplemental research, development and
engineering resources. If we were to lose IT Concepts as a supplier of products
and engineering services, or if IT Concepts were prohibited or restricted from
importing a portion of its engineering requirements or resources, because of
lack of availability of applicable immigration visas or otherwise, we would be
required to find alternative suppliers of products and services or hire
additional engineering personnel to provide the services. This could require the
company to incur significant additional research and development costs and delay
shipment of products to customers and the development of new technology and
products. There is a risk that we would not be able to find such personnel or
suppliers at a reasonable

                                      16
<PAGE>

cost, or at all. Any delay in product development or shipment could have a
material adverse effect on our business, operations, financial results and stock
price.

Loss of sole or limited source suppliers may result in delays or additional
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expenses.
---------

     We obtain certain components and complete products from a single source or
a limited group of suppliers. We do not have long-term agreements with any of
our suppliers. We will experience significant delays in manufacturing and
shipping of products to customers if we lose these sources or if supplies from
these sources are delayed.

     As a result, we may be required to incur additional development
manufacturing and other costs to establish alternative sources of supply. It may
take several months to locate alternative suppliers, if required, or to re-tool
our products to accommodate components from different suppliers. We cannot
predict if we will be able to obtain replacement components within the time
frames we require at an affordable cost, or at all. Any delays resulting from
suppliers failing to deliver components or products on a timely basis in
sufficient quantities and of sufficient quality or any significant increase in
the price of components from existing or alternative suppliers could have a
severe negative impact on our financial results and stock price.

The success of our strategic plan to pursue sales in and source significant
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research, development and engineering services from international markets may be
--------------------------------------------------------------------------------
limited by risks related to socio-economic and political conditions in such
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markets.
--------

     For the fiscal year ended June 30, 2000, we derived approximately 14% of
our product revenues from international sales. We currently have a local
presence in Singapore, Brazil, Britain and Switzerland. We rely on products and
services provided by IT Concepts which in turn relies on research development
and personnel support from Russia. There is a risk that we may not be able to
successfully market, sell and deliver our products in foreign countries, or
successfully rely on supplemental offshore research and development resources.

     Risks inherent in marketing, selling and delivering products in, and
sourcing research and development services from, foreign and international
markets, include those associated with:

     .    regional economic conditions

     .    delays in or prohibitions on exporting products resulting from export
          restrictions for certain products and technologies, including "crime
          control" products and encryption technology

     .    loss of, or delays in importing products, services and intellectual
          property developed abroad, resulting from unstable or fluctuating
          social, political or governmental conditions

     .    fluctuations in foreign currencies and the U.S. dollar

     .    loss of revenue, property (including intellectual property) and
          equipment from expropriation, nationalization, war, insurrection,
          terrorism, criminal acts and other political and social risks

     .    the overlap of different tax structures

     .    seasonal reductions in business activity

     .    risks of increases in taxes and other government fees

     .    involuntary renegotiations of contracts with foreign governments

     In addition, foreign laws treat the protection of proprietary rights
differently from laws in the United States and may not protect our proprietary
rights to the same extent as U.S. laws. The failure of foreign laws or judicial
systems to adequately protect our proprietary rights or intellectual property,
including intellectual property developed on our behalf by foreign contractors
or subcontractors may have a material adverse effect on our business,
operations, financial results and stock price.

We will need to raise additional debt or equity financing in the next twelve
----------------------------------------------------------------------------
months.
-------

     As of March 31, 2001, we had $26,503,000 in working capital, which included
$12,007,000 in cash and cash equivalents and restricted cash. In addition, we
had $5,908,000 available under the Identix Bank Line of Credit, which has been
renewed to June 20, 2001, and ANADAC had $5,434,000 available under the ANADAC
Bank Line of Credit, which has been renewed to June 30, 2001. While the Company
believes that cash flow from operations, together with existing working capital
and two existing bank lines of credit, will be adequate to fund the Company's
cash requirements through fiscal 2001, we will need to raise additional debt or
equity financing in the next 12 months. We may not be able to obtain additional
equity or debt financing and if successful in securing additional financing, we
may not be able to do so on terms that are not excessively dilutive to existing
stockholders or less costly than existing sources of debt financing. Failure to
secure additional financing in a timely manner and on favorable terms could have
a severe negative impact on our financial performance and stock price.

                                      17
<PAGE>

One stockholder owns a significant portion of our stock and may delay or prevent
--------------------------------------------------------------------------------
a change in control or adversely affect the stock price through sales in the
----------------------------------------------------------------------------
open market.
------------

     As March 31, 2001, the State of Wisconsin Investment Board owned
approximately 11% of the Company's outstanding common stock. The concentration
of large percentages of ownership in any single shareholder may delay or prevent
change in control of the Company. Additionally, the sale of a significant number
of our shares in the open market by a single shareholder or otherwise could
adversely affect our stock price.

Our products and certain of our services are complex, may contain undetected or
-------------------------------------------------------------------------------
unresolved defects when sold or may not meet customer's performance criteria,
-----------------------------------------------------------------------------
and may be difficult to successfully manufacture in volume.
-----------------------------------------------------------

     Performance failure in our products or certain of our services may cause
loss of market share, delay in or loss of market acceptance, additional warranty
expense or product recall, or other contractual liabilities. The complexity of
certain of our fingerprint readers may make the manufacturing and assembly
process of such products, especially in volume, complex. This may in turn lead
to delays or shortages in the availability of certain products. The negative
effects of any delay or failure could be exacerbated if the delay or failure
occurred in products or services (such as itrust services ) that provide
personal security, secure sensitive computer data, authorize significant
financial transactions or perform other functions where a security breach could
have significant consequences.

     If a product or service fails to meet performance criteria, we may delay
recognizing revenue associated with a product or service and face higher
operating expenses during the period required to correct the defects. There is a
risk that for unforeseen reasons we may be required to repair or replace a
substantial number of products in use or to reimburse customers for products
that fail to work or meet strict performance criteria. We carry product
liability insurance, but existing coverage may not be adequate to cover
potential claims.

Failure by us to maintain the proprietary nature of our technology, products and
--------------------------------------------------------------------------------
manufacturing processes could have a material adverse effect on the Company's
-----------------------------------------------------------------------------
business, operating results, financial condition and stock price and on the
---------------------------------------------------------------------------
Company's ability to compete effectively.
-----------------------------------------


     We principally rely upon patent, trademark, copyright, trade secret and
contract law to establish and protect our proprietary rights. There is a risk
that claims allowed on any patents or trademarks we hold may not be broad enough
to protect our technology. In addition, our patents or trademarks may be
challenged, invalidated or circumvented and we cannot be certain that the rights
granted there under will provide competitive advantages to us. Moreover, any
current or future issued or licensed patents, trade secrets or know-how may not
afford sufficient protection against competitors with similar technologies or
processes, and the possibility exists that already issued patents or trademarks
may infringe upon third party patents or trademarks or be designed around by
others. In addition, there is a risk that others may independently develop
proprietary technologies and processes, which are the same as, substantially
equivalent or superior to ours, or become available in the market at a lower
price.

     There is a risk that we have infringed or in the future will infringe
patents or trademarks owned by others, that we will need to acquire licenses
under patents or trademarks belonging to others for technology potentially
useful or necessary to us, and that licenses will not be available to us on
acceptable terms, if at all.

     We may have to litigate to enforce our patents or trademarks or to
determine the scope and validity of other parties' proprietary rights.
Litigation could be costly and divert management's attention. An adverse outcome
in any litigation may have a severe negative impact on our financial results and
stock price. To determine the priority of inventions, we may have to participate
in interference proceedings declared by the United States Patent and Trademark
Office or oppositions in foreign patent and trademark offices, which could
result in substantial cost to us and limitations on the scope or validity of our
patents or trademarks.

     We also rely on trade secrets and proprietary know-how, which we seek to
protect by confidentiality agreements with our employees, consultants, service
providers and third parties. There is a risk that these agreements may be
breached, and that the remedies available to us may not be adequate. In
addition, our trade secrets and proprietary know-how may otherwise become known
to or be independently discovered by others.

If we fail to adequately manage growth of our business, it could have a severe
------------------------------------------------------------------------------
negative impact on our financial results or stock price.
--------------------------------------------------------

                                      18
<PAGE>

     We believe that in order to be successful we must grow . In order to do so,
we must expand, train and manage our employee base, particularly skilled
technical, marketing and management personnel. Significant growth will also
require an increase in the level of responsibility for both existing and new
management. In addition, we will be required to implement and improve
operational, financial and management information procedures and controls. The
management skills and systems currently in place may not be adequate and we may
not be able to manage any significant growth we experience effectively.

We may encounter difficulties in acquiring and effectively integrating
----------------------------------------------------------------------
complementary assets and businesses.
------------------------------------

     As part of our business strategy, we may acquire assets and businesses
principally relating to or complementary to our current operations. We acquired
Identicator Technology, Inc. in fiscal 1999, one company in fiscal 1998 and two
companies in fiscal 1996. These and any other acquisitions by Identix are and
will be accompanied by the risks commonly encountered in acquisitions of
companies. These risks include, among other things:

     .    potential exposure to unknown liabilities of acquired companies

     .    higher than anticipated acquisition costs and expenses

     .    effects of costs and expenses of acquiring and integrating new
          businesses on our operating results and financial condition

     .    the difficulty and expense of assimilating the operations and
          personnel of the companies

     .    the potential disruption of our ongoing business

     .    diversion of management time and attention

     .    failure to maximize our financial and strategic position by the
          successful incorporation of acquired technology

     .    the maintenance of uniform standards, controls, procedures and
          policies

     .    loss of key employees and customers as a result of changes in
          management

     .    the incurrence of amortization expenses

     .    possible dilution to our stockholders

     In addition, geographic distances may make integration of businesses more
difficult. We may not be successful in overcoming these risks or any other
problems encountered in connection with any acquisitions.

Loss of current senior executives and key technical, marketing and sales
------------------------------------------------------------------------
personnel would adversely affect our business.
----------------------------------------------

     Our personnel may voluntarily terminate their relationship with us at any
time, and competition for qualified personnel, especially engineers, is intense.
The process of locating additional personnel with the combination of skills and
attributes required to carry out our strategy could be lengthy, costly and
disruptive. We are dependent on the services of certain key personnel, including
the following:

     .    Robert McCashin, Chairman of the Board and Chief Executive Officer,
          has nearly 30 years of domestic and international marketing and
          leadership experience and plays a key role in heading the Company, its
          Board of Directors and its Senior Management team.

     .    James P. Scullion, President and Chief Operating Officer, and Daniel
          F. Maase, Vice President and Chief Technical Officer, Imaging
          Division, have a combined total of 23 years experience with Identix
          and have a substantial amount of acquired knowledge regarding Identix
          and the biometrics industry generally and Mr. Scullion plays a major
          role in the execution of Identix's strategic plan.

     .    Erik Prusch, Chief Financial Officer, plays a key role in running the
          finance, accounting and treasury operations of the Company.

     .    Grant Evans, Executive Vice President itrust Global Strategy, has a
          central role in the Company's itust division global marketing
          strategy.

     .    Yuri Khidekel, Vice President and Chief Software Technology Officer,
          Security Division, and Yury Shapiro, Vice President and Chief Hardware
          Technology Officer, Security Division, serve as key researchers and
          developers and manage the biometric security research and development
          activities of IT Concepts, a key product and service provider to the
          Company.

     If we lose the services of key personnel, or fail to replace the services
of key personnel who depart from the Company, we could experience a severe
negative impact on our financial results and stock price. In addition, there is
intense competition for highly qualified engineering and marketing personnel in
the Silicon Valley where the Company principally operates. The loss of the
services of any key engineering, marketing or other personnel or the failure of
the Company to attract, integrate, motivate and retain additional key employees
could have a material adverse effect on the Company's business, operating and

                                      19
<PAGE>

financial results and stock price.

Our business operations may be adversely affected in the event of an earthquake.
--------------------------------------------------------------------------------

     Our corporate headquarters and most of our research and development
operations are located in Silicon Valley in Northern California, a region known
for dramatic seismic activity. An earthquake or other significant natural
disaster could have a material adverse impact on our business, financial
condition, operating results and stock price.

Our business operations may be adversely affected by the California energy
--------------------------------------------------------------------------
crisis.
-------

     Our principal facilities are located in the Silicon Valley in Northern
California. California has been experiencing an energy crisis that has resulted
in disruptions in power supply and increases in utility costs to consumers and
business throughout the State. Should the energy crisis continue, together with
many other Silicon Valley companies, we may experience power interruptions and
shortages and be subject to significantly higher costs of energy. Although, we
have not experienced any material disruption to our business to date, if the
energy crisis continues and power interruptions or shortages occur in the
future, they may adversely affect our business. Any material increase in energy
costs may also adversely affect our financial results.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     Interest Rate Risk.  The Company's exposure to market risk for changes in
     ------------------
interest rates relates primarily to the Company's cash equivalents and lines of
credit. The Company does not use derivative financial instruments in its
investment portfolio. The Company's investment portfolio is generally comprised
of money market securities that mature within one year. The Company places
investments in instruments that meet high credit quality standards. These
securities are subject to interest rate risk, and could decline in value if
interest rates fluctuate. Due to the short duration and conservative nature of
the Company's investment portfolio, the Company does not expect any material
loss with respect to its investment portfolio.

     The Company primarily enters into debt obligations to support general
corporate purposes including working capital requirements and capital
expenditures. The Company is subject to fluctuating interest rates that may
impact, adversely or otherwise, its results of operation or cash flows for its
variable rate lines of credit and cash equivalents.

     Foreign Currency Exchange Rate Risk.  Certain of the Company's foreign
     -----------------------------------
revenues, cost of revenues and marketing expenses are transacted in local
currencies. As a result, the Company's international results of operations are
subject to foreign exchange rate fluctuations. The Company does not currently
hedge against foreign currency rate fluctuations. Gains and losses from such
fluctuations are not material to the Company's consolidated results of
operations.


PART II   OTHER INFORMATION

     Item 1.  Legal Proceedings

          The Company is not party to any material legal proceedings.

     Item 2.  Changes in Securities

          In July 2000, the Company entered into a Securities Purchase Agreement
with Motorola, Inc. ("Motorola"), whereby the Company sold 234,558 shares of
Series A Redeemable Convertible Preferred Stock (the "Series A Preferred Stock")
at $15.99 per share, resulting in cash proceeds to the Company of $3,702,000,
net of issuance costs. In accordance with the Securities Purchase Agreement, the
price per share was determined using the average closing price of the Company's
common stock during the ten trading days immediately prior to the sale. The sale
of the Series A Preferred Stock was exempt from registration under applicable
securities laws, however, Motorola has demand registration rights, which were
effective January 7, 2001.

          The Series A Preferred Stock is convertible into shares of the
Company's common stock on a one-to-one basis, subject to adjustment for anti-
dilution. The Series A Preferred Stock is redeemable upon a change in control or
sale of all or substantially all of the assets of the Company at a redemption
price equal to all accrued or declared but unpaid dividends of the Series A
Preferred Stock, plus the greater (as adjusted for any stock dividends,
combinations, or splits with respect to such shares) of (x) the then current
market price of each such share (i.e. the average closing price of the common
stock during the ten trading days immediately prior to the change of control) or
(y) $15.99 per share.

                                      20
<PAGE>

          In connection with the issuance of the Series A Preferred Stock, the
Company also issued Motorola a warrant to purchase 187,647 shares of the
Company's common stock at $17.11 per share. The warrant is immediately
exercisable and expires on July 7, 2005.

          The proceeds from the sale of the Series A Preferred Stock will be
used solely for the research, design, development, marketing and manufacturing
of product and service solutions related to the Company's itrust division.

          On December 22, 2000, the Company entered into a Common Stock Purchase
Agreement with VeriSign Capital Management, Inc. pursuant to which, the Company
sold, on January 2, 2001, 264,901 shares of its common stock at $7.55 per share.
The sale resulted in net cash proceeds to the Company of $2,000,000. In
accordance with the Common Stock Purchase Agreement, the price per share was
determined using the average closing price of the Company's common stock during
the ten trading days immediately prior to the sale. The proceeds from the sale
will be used solely for the research, design, development, marketing and
manufacturing of product and service solutions related to the Company's itrust
division.

     Item 6.  Exhibits and Reports on Form 8-K.

              (a) Exhibits

                  Exhibit
                  Number         Description

                  10.36          Employment Agreement between Identix and Erik
                                 E. Prusch dated April 2, 2001

              (b) During the three months ended March 31, 2001, no reports were
                  filed on Form 8-K.


                                   SIGNATURE

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, Identix Incorporated, a corporation
organized and existing under the laws of the State of Delaware, has duly caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Los Gatos, State of California, on May 11, 2001.

                                        IDENTIX INCORPORATED

                                        BY:     /s/ Erik E. Prusch
                                           ------------------------------------
                                                Erik E. Prusch
                                                Chief Financial Officer

                                      21